Digital Securities and Digital Cash Summit

Frankfurt 2025 Recap

On 26 November 2025, Future of Finance hosted their first international event, the Digital Securities and Digital Cash Summit at the Jones Day offices in Frankfurt. The full-day event explored how the ECB’s Wholesale DLT Settlement trials are unlocking real-world change across payments and capital markets, and what banks, infrastructures and investors must prepare for as the industry moves towards a tokenised future.

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The Event in Numbers

5

Panel Sessions

31

Speakers

52

Registered Delagates

43

Represented Companies

Key Takeaways

Keynote

1. By making central bank money interoperable with blockchains, the ECB trials and experiments identified a solution to a major problem: regulated financial institutions want fiat currency to settle the cash leg of digital asset transactions but in ways that Stablecoins, tokenised deposits and deposit tokens cannot deliver – namely, changing next-to-nothing in terms of how banks use money every day. 2. Cryptocurrency traders and investors and alternative asset managers might be happy to settle trades using Stablecoins that trade at different prices even in the same currency but regulated institutions settling security and fund tokens or digital derivatives are demanding a single, universally available risk-free asset: namely, central bank money - and the ECB trials and experiments showed how it can be achieved. 3. The next challenge is to scale what the ECB trials and experiments proved, especially in conventional equity, bond and derivative markets, because at the moment almost all of the activity generating demand for Stablecoins takes place in the cryptocurrency markets and, if activity in tokenised securities, derivatives and funds does not accelerate, the ECB model of settlement in central bank money will become a white elephant. 4. The solution to the chicken-and-egg problem – to scale, token markets need cash on-chain, but cash-on-chain needs token markets that are scaled – cannot be found by putting tokenised cash and assets on the same infrastructure (or interoperable infrastructures) only, but it is a necessary condition of a solution because the benefits of tokenisation (in terms of peer-to-peer trading and programmable money) then become available. 5. The obvious mistake would be for policymakers and practitioners to get religion about issues such as disintermediation, centralised versus decentralised and private versus public because what the ECB trials and experiments show is that public policy, private profitability, centralised services such as clearing and netting and decentralised networks such as blockchains can be combined successfully to drive change.

Did the ECB Wholesale DLT Settlement Trials solve the absence of cash on-chain or provide no more than a temporary fix?

PANEL 1

1. Tokenised deposits and not the same thing as deposit tokens. Any deposit is a statutory claim against a bank for repayment of the nominal value and therefore a liability of the bank. But a tokenised deposit is a digital object on a particular blockchain that entitles the holder to a particular deposit held at a particular bank by a particular customer of that bank only. A deposit token, on the other hand, is a standardised object that is interoperable between blockchains and can be held by anybody. 2. In principle, deposit tokens can settle in central bank money through existing Real Time Gross Settlement (RTGS) systems operated by central banks, including cross-border systems such as TARGET 2, and (in future) wholesale central bank money assets such as a Central Bank Digital Currency euro, or digital euro. In other words, deposit tokens preserve the singleness of fiat currency money and – unlike Stablecoins, which are bearer instruments transferred between digital wallets - can settle in central bank money via RTGSs. It means this form of digital money can grow on conventional infrastructures and may not even need blockchain technology for issuance and trading. 3. However, while an interoperable deposit token is not difficult to support technically, legal uncertainty persists. Whether a deposit token can be transferred to a non-client of a bank is not yet settled in legal and regulatory terms within jurisdictions of the European Union (EU), let alone between jurisdictions of the EU. The problems in transferring deposits include the extent of deposit insurance cover and the need to run financial crime compliance checks on depositors (which may be eased through automation by EU plans to introduce digital identities). This uncertainty over the transferability of deposits has led to workarounds in Germany, such as equipping customers with two accounts: one to send deposit tokens to another bank and one to receive them. 4. In the United Kingdom, six banks (Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide, and Santander) are working with three other firms (Quant, EY and Linklaters) via the UK Finance trade association on a Pilot scheme to deliver tokenised sterling deposits in three use cases: person-to-person payments, re-mortgages and settlement of digital assets. The firms involved are less concerned about the distinction between tokenised deposits and deposit tokens than achieving inter-bank interoperability through data standards, the governance structures of the issuing banks and building the payments market infrastructure required to scale deposit token payments. A second phase will explore using tokenised deposits to settle cross-border payments. 5. Both banks and central banks favour tokenised deposits and deposit tokens over Stablecoins, because deposits enable banks to continue to use deposit funding to manufacture credit for the wider economy, whereas Stablecoins compete with bank deposits. However, Stablecoins – regulated as Electronic Money Tokens (EMTs) under the Markets in Crypto-Assets Regulation (MiCAR) in the EU - are likely to persist as an alternative form of money even if deposit tokens succeed and scale. This is because Stablecoins are useful not only to cryptocurrency traders but offer access to the US dollar for companies and individuals otherwise denied it, including substantial corporate trading enterprises doing large-scale business across national borders. Stablecoins also avoid the financial crime checks necessary when deposits are transferred. Banks could issue Stablecoins of their own but cannot restrict their use to existing customers. They would also come under pressure to share yield with holders in a way they do not experience with deposits, and struggle to distribute Stablecoins outside their proprietary networks. 6. There is a surfeit of deposit token experiments and initiatives in train – such as Project Agora, UK Finance and the Regulated Liability Network (RLN), to which the ECB has now added Projects Pontes and Appia – which are obscuring the need to maintain the singleness of money and a single method of settling transactions between banks, both in domestic markets and across national borders. If digital money is to preserve the singleness of money, new financial market infrastructure will be needed to clear payments. The complexity of building, governing and policing the infrastructure necessary to make payments in tokenised digital money without breaching the singleness of money inevitably cedes the short-term publicity advantage to Stablecoins. But deposit tokens are likely to prove a more durable long-term solution. Indeed, even Stablecoins ultimately rest on the ability to hold fiat currency on deposit and settle in central bank money.

Where have all the tokenised deposits gone?

PANEL 2

1. The European Stablecoin market is underdeveloped. So far, there are just 17 Stablecoins licensed as Electronic Money Tokens (EMTs) under the Markets in Crypto-Assets Regulation (MiCAR) of the European Union (EU), worth a total of US$600-700 million. This compares with several hundred US dollar equivalents worth more than US$300 billion. 2. The imbalance between the US dollar and euro Stablecoin markets reflects the longstanding dominance of the US dollar in all forms of commercial activity globally. Companies and individuals in jurisdictions where capital controls or volatile domestic currencies obstruct conventional means of access to US dollars were the original customers of Stablecoins and remain important users. US dollar Stablecoins also dominate in the cryptocurrency markets, where all the currency pairs refer to US dollars and traders use the US dollar as their base currency (because of its ready availability and relatively high liquidity). Holders of Stablecoins on-chain can even obtain yields as high as 12 per cent on their holdings via decentralised lending protocols such as Aave, Compound, Morpho and Metamask. Yields on euro Stablecoins, where demand is lower, are as little as a third or a quarter of the yield on US dollar Stablecoins. This further depresses demand for euro Stablecoins from retail investors. A further factor is the absence, unlike in the United States, of a single European fiscal policy, which creates country risk in euro government debt. This fragments the quality of the government bills and bonds that euro-denominated Stablecoin issuers need to hold as reserves (though it can also be argued that a euro portfolio of Stablecoin reserves is more diverse than its US dollar equivalent). In the long term, this problem might be solved by Bitcoin (or some technologically superior cryptocurrency) emerging as a stateless, universally acceptable reserve asset, perhaps for central banks as well as Stablecoin issuers. 3. But the real barrier to Stablecoins growing in Europe is the banks. Stablecoins will not take off in Europe until the banks embrace them, because the banks control access to the corporate treasurers that hold and use cash at scale and that would benefit most from using Stablecoins. And, at present, banks are reluctant to endorse Stablecoins because they profit mightily from a status quo global payments industry that generates, according to McKinsey, US$2.5 trillion in revenue from US$2 quadrillion in payments. European banks fear that, if they offered their corporate clients a convenient way to convert euros on deposit into Stablecoins, they would crush their own margins. Banks also intimidate corporates, which are reluctant to open digital wallets and use Stablecoins because their banking relationships are useful to them for other reasons. 4. The growth of euro Stablecoins in Europe is further constrained by the fact that existing payments systems in the euro area are competitive. The EU Instant Payments Regulation (IPR), which mandates all banks offering euro payments to provide instant payment by October 2025 (within the eurozone) and July 2027 (outside the eurozone), is universalising access to Single European Payments Area (SEPA) Instant Credit Transfers (SCT Inst) 24/7. SEPA also means the cost of making payments across national borders within Europe is nugatory by comparison with the equivalent costs in Asia or North America. SEPA payments are fast as well. This makes euro Stablecoins relatively less attractive as a payment method in Europe. That said, the benefits of SEPA are not available once payments must be made to counterparts beyond Europe. Cross-border payments outside Europe remain expensive, slow, hard to access and opaque. In principle, wallet-to wallet transfers of euro Stablecoins would be highly competitive outside Europe, but regulated banks would still have to operate them in compliance with Anti Money Laundering (AML), Countering the Financing of Terrorism (CFT) and sanctions screening regulations. 5. Tokenised money market funds denominated in euro, accessible via euro Stablecoins, are already helping the euro Stablecoin market to grow. These appeal to institutional investors in a way that decentralised lending protocols do not, but tokenised money market funds remain digital twins rather than digital natives, attenuating the cost savings and yield pick-up. Indeed, holders must pay off-ramping as well as on-ramping fees to banks to buy and sell tokenised money market funds, and act before the daily cut-off deadline as well. The cost-savings, gains in yield and operational convenience need to be larger if tokenised money market funds are to scale. Programmable money issued and exchangeable on-chain in native form, which calculate yield by the second or the minute, can deliver large enough benefits to accelerate the use of euro Stablecoins because the transaction costs of moving and servicing digital money repeatedly are trivial. 6. Another use-case capable of breaking the institutional bias against Stablecoins in Europe is the development of tokenised structured products and tokenised securities markets, in which euro Stablecoins would enable traders and investors to avoid the costs of coming off-chain to access cash. Central securities depositories (CSDs), as guardians of the integrity of issuances, can make securities available in digitally native form. The European Securities and Markets Authority (ESMA) has recognised that the EU Distributed Ledger Technology (DLT) Pilot Regime, a regulatory sandbox that allows market participants to test the trading and settlement of tokenised securities, is not working well because the thresholds are too low and the range of permissible products is too narrow. The Pilot Regime is being revised to lift the thresholds, widen eligible products to include privately managed assets and complex structured products, and broaden the range of settlement assets. However, the changes might not be effective until 2028. There is a risk that the EU squanders the lead created by MiCAR, the Pilot Regime and the ECB trials and experiments, and is overtaken by the United States, where the deregulatory approach of the Trump administration has killed the idea of settlement in central bank money and galvanised the banks (including some banks in Europe) into developing digital asset strategies.

Are euro Stablecoins poised to overthrow the status quo in corporate and consumer payments?

PANEL 3

1. Buy-side and sell-side firms want the established financial market infrastructures (FMIs) of Europe to encourage and support their activities in the digital money and digital asset markets, because they trust them to protect their assets and entitlements. Yet engagement by European FMIs is both narrow (only a few institutions are doing anything) and shallow (as much for show as effect). This is evident in limited investment by FMIs in digital payment and digital asset trading and post-trade clearing, settlement and custody services, limited participation in the European Central Bank (ECB) Wholesale DLT Settlement Trials and the participation of just one traditional CSD in the soon-to-be-liberalised European Union (EU) Distributed Ledger Technology (DLT) Pilot Regime - even though blockchain has the potential to disintermediate incumbents. 2. Obviously, domestic FMIs that dominate their domestic markets have no incentive to invest in digital asset technologies – and the blockchain start-ups and blockchain developers that understand them - that might increase competition. Nor do their local broker and custodian bank customers (which do not want to invest in supporting cross-border business their customers never do) or their international customers such as global custodian banks (which have a vested interest in making it as complicated as possible for foreign brokers and asset managers to access local markets). 3. European FMIs respond vigorously to regulators only. This is evident in their preference for investing in operational resilience to meet a regulatory mandate over future-proofing their existing business against a digital threat. It is also significant that the FMIs that have engaged the most with digital assets are based in jurisdictions (Germany, Luxembourg and Switzerland) where the legal and regulatory environment is clear and well-developed. This implies that European regulators could, by adopting a more liberal approach, accelerate the tokenisation of securities and funds in Europe. 4. At present, even the biggest, multi-jurisdictional FMIs that dominate trading volumes and asset values in Europe, which have invested in digital markets, are driven more by fear than greed. They worry that their large and lucrative franchises in the traditional financial markets might be eroded by Stablecoins or tokenised securities and funds. Their blockchain investments are primarily defensive in nature. 5. Their tentative approach exposes European central securities depositories (CSDs) in particular to the risk of being overtaken (or taken over) by the Depository Trust and Clearing Corporation (DTCC). The American CSD, whose longstanding ambition to become the global CSD was previously driven chiefly by the sheer weight of American institutional money, is now being accelerated by its adoption of a hybrid Cloud technology infrastructure (via AWS and Snowflake) and the deregulatory policies of the Trump administration. It is difficult for Europe, with 27 separate CSDs fragmenting liquidity, to copy the DTCC model of preserving liquidity by allowing issuers to issue stock in traditional and tokenised forms that are interchangeable. 6. Another threat to European FMIs is simply fading into irrelevance. The decision announced by NASDAQ-listed Figure Technology Solutions on 17 November 2025 to offer common shareholders the opportunity to exchange their traditional shares for blockchain-native tokenised equivalents presages a future in which equity is neither listed on traditional exchanges nor issued into traditional CSDs not safekept by traditional custodian banks. The announcement followed a similar September 2025 decision by Galaxy Digital to issue its equity directly on to the Solana blockchain. These native issues are entirely different from the “stock tokens” or “wrapped” equities offered by firms such as Robinhood. 7. Native issuance on blockchain, if adopted widely, threatens to disintermediate both traditional exchanges and CSDs. However, even native blockchain issuance and trading on public permissionless blockchains may still struggle to compete on price with traditional issuance and trading, at least in equities. It may be easier to achieve scale, and generate liquidity, in fixed income markets, where liquidity is lacking, especially in buy-and-hold corporate bond markets. It is repo transactions that drive liquidity in fixed income markets, and tokenisation is well-suited to increasing the efficiency with which collateral is mobilised in repo markets.

Are traditional financial market infrastructures (FMIs) such as stock exchanges and central securities depositories (CSDs) in danger of being overtaken by events?

PANEL 4

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How can issuers and investors best be engaged in making the change?

PANEL 5